Steel-Insight: US Steel Mills Finally in the Pricing Sweet Spot

by James May on JANUARY 21, 2016

US industrial output has been falling on a month-on-month basis since August while the manufacturing purchasing managers’ index is below 50 and suggesting that it will fall further.

Yet, we suggest that US mills are (right now) in a sweet spot in terms of pricing. Are we crazy?

After a dismal 2015, steel mills are finally in a position to drive prices higher. It may not be for long, but any buyers that are short of flat steel in the short term will have to pay substantially higher prices in the next few months. We suggest that prices could rally $100-150 a ton between December 2015 and April/May 2016.

Supply Finally Constrained

Import and domestic supply is curtailed. US mills operated at 60-65% capacity in December.

With continued uncertainty regarding anti-dumping actions, finished steel imports are slowing. Importers cannot start selling again until final determinations are in, meaning that June arrivals are probably the earliest.

Source:Metalminer